determine how well the firm is using its assets and sales revenue to generate a positive return for its owners.
A) Activity ratios
B) Leverage ratios
C) Liquidity ratios
D) Market ratios
E) Profitability ratios

Question

Quizplus · Accepted Answer

Profitability ratios measure how well a company is using its assets and sales revenue to generate a positive return for its owners. These ratios typically include metrics such as return on assets (ROA), return on equity (ROE), and profit margin, all of which are crucial for assessing a firm's ability to generate income relative to its revenue, assets, or shareholders' equity.

Determine How Well the Firm Is Using Its Assets and Sales